Hearing a petition by lawyers Aayush Shukla and Vikash Kumar, Delhi High Court has issued notice to crypto exchanges — WazirX, CoinDCX and CoinSwitch — Securities and Exchange Board of India (SEBI) and Ministry of Information and Broadcasting.
Petitioners in person Shukla and Kumar have approached Delhi High Court seeking issuance of guidelines against the Indian crypto exchanges that are advertising on televisions without adequate standardised disclaimers. The next hearing will be on August 31.
Speaking to Inc42, petitioner Shukla said, “The plea is for mandating guidelines and rules. Directing respondent number four i.e. SEBI to frame appropriate guidelines and rules relating to advertisements of crypto assets that are being run by respondents number 1,2, and 3 i.e. WazirX, CoinDCX and Coinswitch.”
There are mandatory disclaimers for mutual fund products, investing in the share market and so on. However, when it comes to crypto-assets that are inherently more volatile, more vulnerable to supply and demand, have a lot of technicalities involved, the clarity is not there. There have to be certain appropriate advertisement-related guidelines that crypto companies must adhere to, Shukla added.
Shukla is right. In the case of mutual fund products’ advertisements, SEBI has issued a standardised set of guidelines. For instance, it says, in advertisements through audio-visual media like television, a statement “Mutual Fund investments are subject to market risks, read the offer document carefully before investing” shall be displayed on the screen for at least 2 seconds, in a clearly legible font-size covering at least 80% of the total screen space and accompanied by a voice-over reiteration. The remaining 20% space can be used for the name of the mutual fund or logo or name of scheme, etc.
However, this standardisation of disclaimer is not mandatory for crypto products’ advertisements. Exchanges such as WazirX, CoinDCX currently show “Cryptocurrency is an unregulated digital currency, not a legal tender and subject to market risks,” as part of their disclaimer.
Commenting on the case, Shashi Jha, head of compliance & legal at WazirX said that the Advertising Standards Council of India already has guidelines in place for all investment adverts and we already comply with those guidelines and welcome every feedback. However, this incident may not be very substantial but this definitely created a buzz for the whole crypto space which we see as a positive development for the industry as it has helped create more room for further dialogues and discussions on crypto, which will further help people improve their understanding of crypto in general.
Another crypto exchange CoinDCX’s Ramalingam Subramanian, head of brand & communications said that the matter in contention is about drawing up advertising guidelines and the need to have proper disclaimers in advertising for crypto assets. “While regulations, a constant demand from the industry, will cater to the advertising guidelines, adding disclaimers to all our advertisements that go on air has been a part of our self-regulatory framework. We are committed to safe and compliant measures needed for mass adoption of crypto assets and are willing to adhere to all measures that increase investor protection.”
Calling the petition completely misconceived, SEBI however has argued that the Reserve Bank of India who is responsible for regulating the financial market should also be made a respondent in the case.